problem #10

Required information [The following information applies to the questions displayed below.] Blue Water Sails, Inc. (BWS) manufactures sailcloth used by sailmakers that produce sails for sailboats. BWSs sailcloth is the conventional polyester-based sail material and is used widely in recreational boating. Sailmakers throughout the world use BWSs sailcloth. The manufacture of sailcloth has a small number of processes, and BWS integrates them carefully so that there is very little Work-in-Process Inventory. The product is measured in yards of cloth, which is prepared in rolls 42 inches wide. Because it has little Work-in-Process Inventory, BWS also uses backflush accounting to simplify the accounting for its operations. BWS has the following information for the most recent accounting period. The beginning inventory of polyester fiber was $143,400, and the ending inventory was $186,900. Polyester fiber purchased $ 639,000 Conversion cost incurred $ 1,508,000 Direct materials standard cost $ 3.60 per yard of cloth Conversion standard cost $ 8.16 per yard of cloth Units produced 158,100 yards of cloth 2. Under what conditions is backflush costing used in practice?